Iran and the other countries around the Caspian Sea are worried about the plannedbuild-up of Russian naval operations over the next several years. This includes new naval vessels, air power, and missile systems.

The Caspian Sea is the largest enclosed body of water on Earth. It is bordered by Russia, Iran, Turkmenistan, Kazakhstan and Azerbaijan.

OILPRICE speculates that the reason for this military build-up is to put pressure on the countries bordering the Caspian Sea to agree to Russia’s proposal to divide up the $3 trillion dollars worth of petroleum resources in the area based on the amount of shoreline each country has rather than on the equity principle put forward by Iran.

So, why is Russia beefing up its naval presence?

The most likely reason is the one that has bedeviled the region for the last two decades – a final treaty delineating the ownership of the Caspian’s offshore waters and seabed has yet to be signed. While Moscow and Tehran might agree about keeping the U.S. locked out of exploiting the Caspian’s energy resources, worth an eye-watering $3 trillion, they remain at loggerheads over the issue of dividing the Caspian, with Russia insisting that each nation receive offshore waters in proportion to its coastline, while Iran insists that all five nations receive an equitable twenty percent apiece. Under the Russian definition Iran’s share would be 11-13 percent…

What seems to be happening is that Russia has decided that gunboat diplomacy has its uses, and an upping of its naval presence in the Caspian might finally persuade Iran’s obstinate mullahcracy that it’s time to divvy up the Caspian pie according to Moscow’s formula. And, after all, 11-13 percent of $3 trillion is no small chunk of change, even to an OPEC member.

International law has yet to decide whether the Caspian Sea is an inland “sea” or a lake, a decision which will have significant implications for both the applicability of the 1982 U.N. Convention on the Law of the Sea and negotiations over the placement of boundaries which will affect the rights to the undersea petroleum deposits.

For background on the Caspian Sea resources and the attempts to exploit it see Steve LaVine’s The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea. Also read thisinterview with Richard Morningstar, Bill Clinton’s special envoy for the Caspian Sea about Western attempts to build a pipeline from the region to Europe to prevent Russia from monopolizing the area’s resources. (The Oil and Glory Interview: U.S. Eurasian Energy Czar Richard Morningstar)

So, the Russian Federation, like its four Caspian neighbors, is now beginning to tiptoe into its offshore waters, all the while insisting that its vision of divvying the inland sea prevails.

The last two decades have seen an apparent pragmatism slowly evolve over the Caspian offshore resources, first in Baku, followed by Astana, Ashgabat and more recently and reluctantly, Tehran and Moscow. While the issue of a final disposition of the Caspian’s offshore waters remains significant if for no other reason than the various proposed undersea pipelines such as Turkmenistan-Baku, which could be an influential element in the European Union’s projected $15 billion Nabucco natural gas pipeline reverie, all five nations seem to be moving cautiously towards planting their offshore flags in areas unlikely to arouse their neighbors.